Largest US corporation complies with Indonesian peat governance

JAKARTA (foresthints.news) – The largest US privately held corporation in terms of revenue, Cargill, has demonstrated legal compliance at an early stage with Indonesian peat governance efforts, as proven by the submission of a peat recovery plan document by its palm oil company to the Indonesian Ministry of the Environment and Forestry.

The ministry established a peat protection zone map in February this year, incorporating within it one million hectares of palm oil concessions which form part of global palm oil supply chains.

“The Cargill palm oil company has submitted its peat recovery plan document to the ministry, as have some other Singapore and Malaysian-based companies such as GAR, RGE and IOI,” the Ministry’s Secretary General Bambang Hendroyono explained to foresthints.news(Aug 16) at the ministry building.

However, he sought to underline that not all subsidiaries of leading palm oil business groups operating in Indonesia have submitted their peat recovery plan document. In fact, the latest update, as of mid-August, shows that just 44 palm oil companies have submitted peat recovery plan documents covering concessions in excess of 320 thousand hectares spread across 10 provinces, more than 120 thousand hectares of which are peat protection zones.

“This means that only about 20% of 229 palm oil companies have submitted their peat recovery plan documents. The others are still engaged in the submission process. Of course we really appreciate this legal compliance from the palm oil sector,” said the Secretary General.

The map below, which was taken from the ministry’s presentation slides, demonstrates the distribution of peat protection zone (delineated in green) in the Cargill palm oil company’s concession located in South Sumatra, one of the country’s peat restoration priority provinces.

Improving global supply chains

The Ministry’s Secretary General stressed that once all the stages in the compliance process have been completed, the ministry will publicly announce which palm companies have complied and which haven’t. “This announcement is part of transparency. Those palm oil companies not in compliance will be hit with an administrative sanction,” Bambang warned.

“Indonesia is the world’s largest palm oil producer. The improvement of peat governance here, which is being carried out intensively, is certainly part of improving global palm oil supply chains,” he continued. The Secretary General explained that considering almost all palm oil players operating in Indonesia are linked to global supply chains, violations of Indonesia’s new peat regulations by palm oil companies are tantamount to violations against global supply chains.

Bambang added that the ministry’s monitoring results had turned up numerous concrete examples of such violations. The photos below, from monitoring undertaken by the ministry, depict violations – in the form of new peat development – committed by palm oil companies in Sumatra and Kalimantan. These violations have been proved to be linked to global supply chains.

“The government really doesn’t want the Indonesian palm oil sector to be so frequently associated with counterproductive issues at the global supply chain level, such as peat fires and new peat development,” he exhorted.

The Indonesian government placed a ban on new peat development in early November 2015 on the order of President Joko Widodo. In a bid to improve peat governance, the President also signed a newly-revised government regulation on peat protection and management.

Subsequently, to implement the presidential regulation, Environment and Forestry Minister Siti Nurbaya issued a number of ministerial-level peat regulations in February this year, including a legally-based map on peat protection and cultivation zones.